Most people with a traditional 401(k) must begin taking required minimum distributions the year they turn 73, with the first withdrawal due by April 1 of the following year and every later withdrawal due by December 31. The 401(k) required minimum distribution rules set the amount using your prior year-end balance and an IRS life-expectancy factor, and missing a deadline triggers a 25 percent excise tax on the shortfall. Under SECURE Act 2.0, the trigger age rises again to 75 for anyone who turns 74 after December 31, 2032.1Office of the Law Revision Counsel. 26 USC 401 Qualified Pension, Profit-Sharing, and Stock Bonus Plans
When Your First Withdrawal Is Due
The IRS calls the starting point your “required beginning date.” If you turned 72 after December 31, 2022, your applicable age is 73. If you turn 74 after December 31, 2032, it shifts to 75. Your required beginning date is April 1 of the calendar year after you reach that age, and every RMD after the first is due by December 31 of its own year.2Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
That April 1 grace period looks generous but sets a trap. If you turn 73 in 2026 and wait until April 1, 2027 for the first withdrawal, your second RMD is still due by December 31, 2027. Two taxable distributions land on the same return.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs The doubled income can push you into a higher bracket, increase how much of your Social Security is taxed, and lift your modified adjusted gross income enough to trigger Medicare Part B and Part D surcharges through IRMAA two years later. Unless you have a specific reason to wait, taking the first RMD in the year you actually turn 73 usually costs less in total tax.
How the Amount Is Calculated
Take your 401(k) balance as of December 31 of the prior year and divide by a life-expectancy factor from the IRS Uniform Lifetime Table in Publication 590-B.4Internal Revenue Service. Publication 590-B (2025), Distributions from Individual Retirement Arrangements (IRAs) If your balance was $100,000 at the end of 2025 and you turn 75 in 2026, the divisor is 24.6, making your RMD roughly $4,065.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
A different table applies if your spouse is both the sole beneficiary and more than 10 years younger than you. The Joint and Last Survivor Expectancy Table produces a larger divisor and a smaller required withdrawal.5Internal Revenue Service. IRA Required Minimum Distribution Worksheet – Spouse 10 Years Younger Marital status for this purpose is generally set as of January 1 of the distribution year.
Because the calculation locks onto the prior year-end balance, a market drop mid-year does not shrink your obligation. The recalculation happens fresh each year, so the RMD never runs on autopilot.
Each 401(k) Is Calculated and Paid Separately
IRAs let you total the RMD across accounts and withdraw the full amount from just one of them. That flexibility does not exist for 401(k) plans. Each 401(k) needs its own calculation, and you must take the withdrawal from that specific account.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If you left small balances at three former employers and still contribute to a fourth, that is four separate calculations and four separate withdrawals. Consolidating old accounts into your current plan or rolling them into an IRA simplifies the process.
The Still-Working Exception
If you are still employed past 73 and participate in your current employer’s 401(k), you can delay RMDs from that plan until the year you actually retire. The required beginning date becomes April 1 of the year after retirement.1Office of the Law Revision Counsel. 26 USC 401 Qualified Pension, Profit-Sharing, and Stock Bonus Plans
One disqualifier is absolute: if you own more than 5 percent of the business sponsoring the plan, the exception does not apply. Ownership uses the Section 416 definition, which pulls in indirect ownership through family members and related entities.6Office of the Law Revision Counsel. 26 USC 416 Special Rules for Top-Heavy Plans
The exception only shelters the 401(k) at your current employer. Old 401(k) accounts from previous jobs stay on the age-based deadline. Some workers roll prior accounts into their current plan before reaching the applicable age to shelter a larger balance, when the current plan accepts incoming rollovers.
Roth 401(k) Balances Are Exempt
Starting with tax years after December 31, 2023, designated Roth accounts in 401(k) and 403(b) plans are no longer subject to lifetime RMDs.3Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs If your 401(k) has both traditional and Roth balances, only the traditional portion generates an RMD. The exemption is a lifetime one; beneficiary rules still apply after death.
What Happens If You Miss an RMD
The excise tax on a shortfall is 25 percent of the amount you should have withdrawn.7Office of the Law Revision Counsel. 26 USC 4974 Excise Tax on Certain Accumulations in Qualified Retirement Plans A $10,000 miss costs $2,500 in penalty on top of the regular income tax you still owe when the money eventually comes out.
You can cut the penalty to 10 percent by acting inside the correction window, which runs from when the tax is imposed until the earliest of the IRS mailing a notice of deficiency, assessing the tax, or the end of the second tax year after the year of the miss. In practice, that is roughly two years.7Office of the Law Revision Counsel. 26 USC 4974 Excise Tax on Certain Accumulations in Qualified Retirement Plans
To fix a miss, withdraw the shortfall as soon as you can and file Form 5329 with your tax return. Attach a written explanation of the error and the correction. If the miss was a reasonable mistake rather than neglect, the IRS can waive the penalty entirely, and it grants these waivers regularly when the correction is prompt and the explanation credible.8Internal Revenue Service. Instructions for Form 5329 (2025) Processing delays by a plan administrator, a death in the family, and serious illness are the kinds of reasons the IRS accepts.
Inherited 401(k) Accounts
Rules for beneficiaries turn on who they are and when the owner died. For deaths in 2020 or later, most non-spouse beneficiaries must empty the inherited account by December 31 of the tenth year after death.9Internal Revenue Service. Retirement Topics – Beneficiary Adult children, siblings, and friends fall under this 10-year rule with no life-expectancy stretch.
Whether annual distributions are required inside that 10-year window depends on whether the owner had already reached their required beginning date. The IRS waived penalties for missed annual amounts from 2021 through 2024 when the owner died on or after that date, signaling the annual requirement applies in those cases. From 2025 onward, expect enforcement. If the owner died before the required beginning date, the only firm deadline is the end of year ten.
Eligible designated beneficiaries get better treatment: surviving spouses, minor children of the deceased, disabled or chronically ill individuals, and anyone not more than 10 years younger than the owner. They can use a life-expectancy schedule.9Internal Revenue Service. Retirement Topics – Beneficiary Surviving spouses can also roll the account into their own IRA or retirement plan, resetting the timeline to their own required beginning date. A minor child loses eligible status at the age of majority, and the 10-year clock starts then.
If the owner had already begun RMDs, the beneficiary must finish the owner’s remaining distribution for the year of death. That final-year amount does not disappear when the account changes hands.
Reducing the Tax Impact
Qualified charitable distributions let account owners age 70½ or older send up to $111,000 per person in 2026 directly from an IRA to a qualifying charity. The amount counts toward the RMD but stays out of taxable income, which keeps IRMAA surcharges and Social Security taxation down. QCDs cannot come directly from a 401(k); the statute limits them to individual retirement plans. Rolling a 401(k) balance into an IRA opens the option, though the rollover forfeits the still-working exception and can change creditor protection.
Federal tax withheld from a retirement plan distribution is treated as paid evenly across the year, even if the distribution happens in a single December withdrawal. That treatment lets some retirees skip quarterly estimated payments, take the RMD late with heavy withholding, and avoid underpayment penalties.
Beyond the first-year decision, ongoing planning usually centers on filling lower tax brackets in low-income years and taking only the minimum in years with large capital gains or one-time income. You cannot avoid RMDs, but smoothing taxable income across a 20- or 30-year retirement generally costs less than reacting year by year.